Cowles Family Looking To Sit Back And Prosper

MINNEAPOLIS — The Cowles family, still digesting the rich proceeds from the sale of its Des Moines media company, is displaying no appetite for a sale of its last major enterprise, Cowles Media Co.

The family also seems to have lost its taste, at least for now, for wielding power within Cowles Media, which publishes the Minneapolis Star and Tribune and other daily and weekly newspapers.

Since early last year, the family--whose surname is pronounced

``coals``--has been taking steps to solidify its majority control over the voting stock of Cowles Media while minimizing its representation within management and the board of the company. The responsibility for running the Minneapolis company has been turned over to a group of young, nonfamily managers, led by David C. Cox, 48, while Cowleses have been giving up their board seats to outside business executives.

Many family members interviewed said this new, more passive role suits them.

Many of them seem to be weary of previous board-room battles that pitted one family branch against another. Others members of this large and loosely confederated clan are too flush with cash from the nearly completed liquidation of the family`s Des Moines Register and Tribune Co. to be concerned much about Cowles Media.

Register and Tribune shareholders already have received $245 a share, or $274.4 million, in liquidation distributions with an undetermined amount still to come. About 18 months ago, the thinly traded Register and Tribune stock was selling in the $30s.

Some observers wonder, however, whether the family has given Cox and his team free rein to build Cowles Media or has them on a short leash that can be yanked if earnings slide or dividends are threatened. Some warn that, as passive investors, family members could be quicker to criticize management decisions for which they bear no direct responsibility.

If the family did change its mind about keeping Cowles Media--as it did with its Des Moines company--then two prospective buyers are close at hand. During the last year, media rivals Gannett Co. and Washington Post Co. each has paid about $70 million to acquire 20 percent of the 3 million Cowles Media shares outstanding. Each has said the purchases were for ``investment purposes.``

These days, however, the family generally seems encouraged by the continuation of an earnings turnaround that began in 1984 at Cowles Media and by improvements in the editorial quality, circulation and profits at the flagship Star and Tribune.

In the fiscal year ended last March, Cowles Media had net income of $15.7 million, or $5.06 a share, on revenues of $232.1 million. In the nine months ended last Dec. 28, net income was $17.2 million, or $5.48 a share, on revenues of $185.2 million.

The Star and Tribune, with daily circulation of 382,000 and Sunday circulation of 601,000, accounts for 80 to 85 percent of Cowles Media`s profits and revenues, the company said.

``We had a meeting of the voting trust in January and everyone was very enthusiastic about the future of the company,`` Morley Cowles Ballantine said. Ballantine, 61, is one of four children of the company`s founder, the late John Cowles Sr. She also is one of the five trustees of the Cowles family voting trust, which controls about 51 percent of Cowles Media`s voting stock. Asked what could make the family reconsider holding on to Cowles Media, she said, ``You don`t make changes unless things are going very poorly.``

The family did make several major changes, particularly within the voting trust, beginning in January, 1985. The changes have shifted the balance of power back to the Minneapolis branch of the family, led by John Cowles Jr., and away from the Des Moines branch and its nominal head, David Kruidenier.

For example, Ballantine, who in the past often sided with her Des Moines relatives, will step down as a Cowles Media director at the annual meeting in July, just as a relative from the Des Moines branch did last year. That could leave Kruidenier, 64, Cowles Media chairman, as the only family member on the board.

Kruidenier also had been head of the Des Moines company and strongly opposed its sale.

Last July, Kruidenier turned over the duties of chief executive at Cowles Media to Cox, who retained the position of president he has held since 1984. Kruidenier remains a trustee of the reconstituted voting trust, which now is dominated by the four children of John Cowles Sr.

In January, 1985, the voting trust was enlarged and its control of the voting stock increased to 51 percent from about 45 percent. Trust members also said then they wanted the life of the voting extended another 10 years, from 1990 to 2000. However, the extension can`t be implemented until 1988 at the earliest.

The only family member involved in Cowles Media management is John

``Jay`` Cowles III, son of John Cowles Jr. Jay Cowles, 32, joined the company as director of planning a year ago.